Munich Personal RePEc Archive

Interest rate rules VS money growth rules: some theoretical issues and an empirical application for Venezuela

Victor, Olivo (2005): Interest rate rules VS money growth rules: some theoretical issues and an empirical application for Venezuela. Published in: Serie Documentos de Trabajo Banco Central de Venezuela No. Documento Number 68 (February 2005)

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Abstract

This paper main theme is that the arguments against the use of money (i.e. money growth rate rules) in the conduct of monetary policy are not so strong, particularly for less developed economies. I analyze this topic in two ways: i) using some simple theoretical forward-looking macro models and evaluating their inflation and output variance under interest rate and monetary aggregates rules; ii) setting up models similar to the theoretical ones, but with more complex dynamics, assigning values to the parameters, and solving them for different kind of shocks under interest rate and monetary aggregates rules.

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